Bangkok--26 May--Fitch Ratings Fitch Ratings (Thailand) Limited has today assigned a National Long-term rating of ‘A(tha)’ and a National Short-term rating of ‘F1(tha)’ to PTT Aromatics and Refining Public Company Limited (PTTAR). At the same time, the agency has also affirmed the ‘A+(tha)’ National Long-term ratings on PTTAR’s secured and amortising debentures. The Outlook on the ratings is Stable. The ratings reflect PTTAR’s high operational links and support from PTT Public Company Limited (PTT), as well as its larger operating scale and more flexible and diversified operations after the amalgamation, which will, to a certain extent, help reduce the overall earnings volatility. Fitch notes the amalgamation also enhances the company’s economy of scale and market position, and gives it a stronger financial position with lower financial leverage and higher coverage ratios. After the completion of the second aromatics complex (CPX II), PTTAR will become one of the top five aromatics producers in Asia and one of the largest complex oil refineries in Thailand. The ratings are also based on PTTAR’s secured long-term feedstock and aromatics sale agreements, its modern and complex refinery and cost-competitive position. Most of PTTAR’s aromatics products are sold to PTT under long-term contracts, while PTTAR sources condensate locally from the Gulf of Thailand, secured under a long-term contract with PTT. PTTAR’s credit strengths are tempered by its high vulnerability to oil prices and gross refinery margin (GRM) fluctuations, as well as the cyclicality of its aromatics business. PTTAR is also exposed to supply risks on its oil refining business owing to a high dependence on foreign oil supplies. Other credit concerns relate to its relatively large investment plan, which will lead to higher debt and financial leverage over the near term, as well as its high customer concentration. PTTAR reported strong earnings performance in 2007, with EBITDA of THB25.8 billion (based on unaudited and pro forma financial statements), up 59% yoy, thanks to higher GRM and product-to-feed margins of aromatics. Nevertheless, its earnings weakened substantially in Q108 with EBITDA of THB2.2bn, despite being partly offset by the remaining strong GRM and higher sales volume. This was attributable to a sharp decline in product-to-feed margins of aromatics as a result of increasing feedstock costs as well as the Thai baht’s appreciation against the US dollar. Although Fitch already expects PTTAR’s earnings to decline in 2008 and 2009 due to expected weakening of GRM and aromatics’ product-to-feed margins, a sustained and sharp decline in petrochemical spreads and GRM could put downward pressure on the ratings. The Stable Outlook reflects the agency’s expectation that PTTAR’s stronger market position and improved financial position will support its large investment plans. Fitch also expects PTTAR to keep its leverage consistent with the current credit metric throughout the industry cycle. Incorporated on 27 December 2007, PTTAR was a result of the amalgamation of The Aromatics (Thailand) Public Company Limited, the first and largest aromatics producer in Thailand, and Rayong Refinery Public Company Limited, a complex oil refinery with a capacity of 145,000 barrels per day. The amalgamation was initiated by PTT, the major shareholder of both entities, reflecting PTT’s intention to restructure and consolidate its investments in the refining and petrochemicals businesses to gain benefits from integration and rationalise investment duplications. After the amalgamation, PTT, Thailand’s largest and state-owned fully-integrated oil and gas company, owns a 48.7% stake in PTTAR. Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. For more information please contact: Lertchai Kochareonrattanakul, Wasant Polcharoen, Vincent Milton; Bangkok, +662 655 4755